Vanavil Estate Vs PCIT (Central) (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT), Chennai, allowed the assessee’s appeals for Assessment Years 2017-18 and 2018-19 and set aside the revisionary orders passed by the Principal Commissioner of Income Tax (Pr. CIT) under Section 263 of the Income Tax Act. The Tribunal held that the Pr. CIT was not justified in invoking revisionary jurisdiction in relation to issues that were already pending consideration before the Commissioner of Income Tax (Appeals) [CIT(A)], and further found that the Assessing Officer (AO) had adopted a legally permissible view after conducting enquiries.
The assessee, a partnership firm engaged in the business of real estate, was subjected to a survey under Section 133A on August 7, 2019, during which a laptop was impounded. Analysis of the laptop allegedly revealed gross receipts substantially higher than those disclosed in the regular books of account. Based on the survey findings, the AO reopened the assessments for AYs 2017-18 and 2018-19 under Section 148, forming a belief that the profit element embedded in the differential receipts had escaped assessment. During reassessment proceedings, the assessee disputed the reliability of the laptop data. After considering the objections, the AO treated the differential receipts as undisclosed turnover and estimated the profit embedded therein at 11.59% and 12.56% respectively, adding only the profit element to the total income. For AY 2017-18, differential receipts of ₹8.74 crore resulted in an addition of approximately ₹1.01 crore, while for AY 2018-19, differential receipts of ₹52.42 crore resulted in an addition of approximately ₹6.58 crore.
